MLM Startup - The Basics
Rules to Keep in a Very Safe Place
The umbrella term for the business is "direct selling." Whether it is the variety practiced by Tupperware or Amway or
Nikken or The Pampered Chef, it still is in the business "species" known as direct selling. Under that umbrella is
found party plans, MLM or multilevel marketing, network marketing and direct sales. The objective is always the
same, however...build a consumer products and/or services marketing company that distributes through a vast
network of salespersons who sell both consumer products and services, as well as recruit and develop an even
larger network of salespersons to sell, and for which remuneration is paid on the sales volume of those "downline"
Although a significant force with more than $100 billion in worldwide sales (with more than 15 million distributors in
the U.S. and more than 60 million worldwide), it is nevertheless an ultra niche industry with its own culture and
formatting. Those who understand this focused culture and business model can prosper, and others will be
"strangers in a strange land."
Although it may look straightforward, starting the successful MLM business is no simple matter. A methodology
course could fill a library. A practical advice primer could fill books. The following is an essentials sampler from an
industry tour guide, a professional MLM Consultant and MLM Law Professional who has spent two decades as a
"consigliore" or trusted business and legal advisor to legions of leading direct selling companies. Those companies
have started in back bedrooms and garages and have grown and ranged in size from mom and pop boutique
businesses to multi-national, multi-billion dollar conglomerates.
If you are looking for detailed insight from this author, attend a conference sponsored by www.mlmlegal.com,
Starting and Running the Successful MLM Company, or read one of two books by the author, Starting and Running
the Successful MLM Company or Network Marketing: What You Should Know. (Legaline Publications,
1-800-231-2162 or visit www.mlmlegal.com) However, for purposes of a "to do" list, consider the following very brief
but very practical tips on starting the successful MLM company. Each of these factors is so critical that each one
might be placed on the "make it or break it" list. In the first of three presentations, this article addresses issues of
capital, recruitment, legal and trademark. In a second article, Part II will focus on equally key issues including MLM
business experience, technology and software, product and international markets. Part III will focus on
compensation plan, outsourcing, owner relationships and attitude and commitment. These tips are obviously not
good enough to warrant being etched on tablets on top of a mountain in the Sinai desert, but they are worthy of
being tucked into your MLM "bible" somewhere between "Solicitations" and "Celebrations."
Capitalization-Can you Recruit?
Do you have a great recruitment background, the ability to recruit, or a lineup of strong distributors? If so, your
need for capital will be substantially diminished. In the end, your ability to recruit a talented and motivated sales
network will be the number one key to your success. In fact, your need for capital is in direct inverse proportion to
your ability to recruit. If you can recruit, you may have a cash cow on your hands. If recruitment will go slow, your
business plan needs to allow for buffer capital to hold you through one, two or three years of break even or loss
scenarios. That capital should be lined up ahead of time, either through personal and close relationship resources
or through angel investors. The likelihood of public financing for the new MLM is very remote.
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© Jeffrey Babener, 2013